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Copyright © 2015 Oracle and/or its affiliates. All rights reserved.

CFOs in the Digital AgeModern Finance Best Practices

Loren MahonVice President, Finance SystemsOffice of the CEOOracle Corporation


1980s 1990s 2000s 2010s NOW

what’s

AFFECTINGYour Company?


72% of CEOs say the rapid pace of technology innovation is their biggest challengeSource: 2015 Fortune 500 CEO Survey

72%


Readiness for Inorganic Growth

Efficiency in Post-Merger Integration

Growth from Non-Traditional MarketsDemand for Faster Innovation CyclesRapid Response to Non-Traditional Competitors

Digital Transformation of the Business

Top Boardroom Priorities

Source: “Inside The 2015 Boardroom Priorities”, Constellation Research, December 2014


Digital Opportunities Span Every Function

Customer Insight

Customer Interactions

Revenue Growth

Digitized Processes

Workforce Productivity

Business Insight


Impact of Digital TechnologiesTransforming how industries create value

MOBILE & SOCIAL

RETAIL

Commerce Anywhere on

Any Device

HEALTH SCIENCES

Personalized Medicine

FINANCIAL SERVICES

Online Banking and Mobile Payments

COMMUNICATIONS

Machine-to-Machine

Communications

$1+ trillion in Mobile eCommerce revenue by 2017

$17+ billion in Big Data revenue by 2015

BIGDATA

$200+ billion in Cloud Services revenue by 2015

CLOUDSERVICES

$290+ billion in Machine-to-Machine revenue by 2017

THE INTERNET OF THINGS

UTILITIES

Smart Grids and Flexible Power Consumption

ASSET INTENSIVE

Flexible CapitalPlanning &

Deployment

$

HOSPITALITY

“Above Property” Cloud Solutions


The historic method of value creation matters less in today’s Digital Age: tangible assets now constitute just 20% of total corporate value on the S&P 500, compared to 80% in 1975

Investors are paying more for companies with business models that emphasize “intangible assets” – human capital, customers, and intellectual property – and leverage the wisdom of crowds to co-create products and services

Source: Research by Deloitte & Touche LLP and Open Matters, cited in the Wall Street Journal, July 28, 2014

Intangible Assets: Driving Value Creation in the Digital Age

CFOs who continue to allocate their company’s capital to tangible assets using previous generations of technology are putting their company’s management and shareholders at serious risk, generating lower levels of performance and enterprise value than digitally and big-data savvy CFOs


CFOs: Embracing a Unique Role in the Digital Age

Stewards of Corporate Value:

CFOs have the finance background and understanding of market valuations needed to comprehend the long-term implications of different business models

Leaders and Strategists :

CFOs can rebalance their investment portfolio into intangible assets that can help create more sustainable, valuable business models

Catalysts of Business Model Change:

CFOs have the understanding of finance and growing oversight of IT strategy to invest in digitally-enabled business models


Top CFO Priorities

Reduce Enterprise Operating Costs

Creating a Collaborative / Sharing Environment

Creating an Enterprise View of BusinessOn-Going Monitoring of Business PerformanceQuality of Data used for Business Decisions

Facilitating Analysis & Decision Making

Source: Gartner Survey of 139 CFOs

Finance Needs to Enable Strategic Thinkingthat Drives Value Creation

CustomerSatisfaction

Quality ofProcesses

BusinessOpportunities

EmployeeProductivity

Copyright © 2015 Oracle and/or its affiliates. All rights reserved. Copyright © 2016, Oracle and/or its affiliates. All rights reserved.

What is Finance’s role in measuring and monitoring the new value drivers in today’s digital economy?


Top Value Drivers Selected 1st to 5th

What Are the Value Drivers in the Digital Age?

0% 10% 20% 30% 40% 50% 60% 70% 80%

Plant & Equipment 15%

Supplier Relationships 26%

Patented Products or Processes 27%

Strategy Execution 40%

Strategic Decisions 43%

Brands' Reputation 58%

Human Capital 61%

Customer Relationships 63%

Business Processes 64%

Customer Satisfaction 76%

1st

2nd

3rd

4th

5th

Customer Satisfaction

Quality ofBusiness

Processes

Customer Relationships

Qualityof People

Reputationof Brand

76%

64%

61%

63%

58%

Top 5: Intangible Assets


Who Provides the Information?

Who provides the KPIs needed to manage these value drivers?

Finance Sales Marketing IT HR Outsourced Other

Return on Invested Capital (ROIC) 78.0% 4.7% 5.3% 4.1% 3.9% 2.8% 1.2%

Data quality 38.4% 4.8% 6.8% 39.0% 3.6% 3.2% 4.2%

Employee productivity 29.8% 7.2% 5.6% 7.0% 38.8% 3.7% 7.9%

Social sentiment 26.5% 14.2% 25.1% 9.1% 17.5% 2.5% 5.1%

Competitor activity 21.3% 25.5% 27.9% 8.2% 4.4% 5.4% 7.3%

Customer pipeline/retention 13.9% 42.4% 22.9% 6.1% 7.3% 3.4% 3.9%

Employee engagement and retention 13.0% 5.6% 5.4% 6.6% 61.6% 3.7% 4.1%

Talent sourcing/pipeline 10.3% 4.6% 10.0% 8.4% 58.8% 5.1% 2.7%

Social engagement 10.0% 19.3% 28.0% 11.3% 21.5% 1.6% 8.4%

Digital marketing effectiveness 9.9% 8.9% 43.9% 25.5% 4.8% 3.8% 3.2%

Brand awareness/equity 9.3% 17.0% 54.2% 5.8% 4.1% 5.5% 4.1%

Customer experience and satisfaction 7.6% 35.5% 29.9% 9.2% 4.5% 3.6% 9.7%

Key: Ranked 1st Ranked 2nd


1980s Reporting 1990s Analytics 2000s Reporting 2010s Predictive & Prescriptive Analytics

Descriptive Analytics

QUERY & SEARCH TOOLS

OLAP & VISUALIZATION

DASHBOARDS & SCORECARDS

STATISTICS, DATA MINING

MODELLING, SCENARIOS & MONTE CARLO

Diagnostic Analytics

Predictive Analytics

Prescriptive Analytics

REPORT | ReporterReporting

ANALYSIS | CommentatorAnalyzing

INSIGHT | AdvisorMonitoring

ENGAGEMENT |AdvocatePredicting

LEADERSHIP | StrategistSimulating

What happened? Why did it happen? What is happening? What might happen? What will likely happen?

COMPLEXITY

BUSINESS VALUE

OPTIMIZATION


Finance Needs to Access Right-time Insights

Collecting Data

Collecting Data

Maintaining Spreadsheets

Developing Reports

Other Activities Performing Analysis Developing Reports

MON

TUE

WED

THU

FRI

Maintaining Spreadsheets

Reading Data

Performing Analysis

Interacting with Decision Makers

Other Activities Strategic Initiatives Personal Development

Interacting with Decision Makers

MON

TUE

WED

THU

FRI

Performing Analysis

CLASSIC FINANCE MODERN FINANCE


Keys to Enabling Finance for Critical Decision Making

• Think Strategically. Start with inserting Finance into the flow of business discussions across the company

• Modernize Your Finance Platform. Implement cloud services in order to gain faster and better insights at a lower cost

• Deliver Better Analytics. Provide a single source of truth that enables unique insights and helps drive business value


Biggest Barriers to Public Cloud Adoption

Source: Harvard Business Review Analytic Services Report: Cloud Computing Comes of Age, 2015, n = 376

62%

36% 34%

27%

0%

10%

20%

30%

40%

50%

60%

70%

Security Concerns Integration Challenges Cost of Changing fromCurrent Systems

Investment in ExistingSoftware Licenses


CFOs Care About Security

System Availability

Brand Integrity

Governance of Data

Data Security

Regulatory Compliance

Data Residency (Global companies)

Access Controls (IDM)

✓

Data Privacy

74%

46%

53%

Source: CFO.com, 2015


SaaS Security Checklist

✓

✓

✓

Cloud Provider Viability

Secure Data Isolation

Designed to be Secure at Every Layer

$


Shared resources where it makes sense. Isolated where it doesn’t.

Secure Data Isolation

All the benefits of SaaS, plus

• Your own instance; more security, less risk

• You choose when you upgrade

• Minimized “noisy neighbor” syndrome

Legacy Multi-Tenancy(Co-mingled)

Isolated Tenancy


Designed to be secure at every layer

A Modern Secure Cloud

Data Vault Option

Business Users- role based access

Global Access Controls- consistent on-off boarding

Network Layer

Physical Layer

Chip Layer

Storage Layer

Platform Layer

Application Layer

Compute Layer

Operating System Layer

Data Center ManTrap

Backup and Redundancy

SaaS

PaaS

IaaS


Finance Talent Needs to Evolve as Well

Effectiveness

Only 28% of CFOs ranked their direct reports as having strong functional expertise

Strategic Vision

Only 11% of CFOs ranked their direct reports effective at creating a vision, fostering buy-in, and developing talent pools to execute on strategy

Business Partnering

Only 5% of CFOs considered their direct reports “effective persuaders” able to simplify complex ideas and communicate effectively to the business

Source: Corporate Executive Board 2013 survey of 673 finance executives at 78 global companies


Recruit and Pay for Different Talent

Groom Talent In-House

Ask the Right Questions

Share Data or It has No Value

Use Technology & Data Insights to Partner

Use Digital Technologies to Attract & Retain

Game plan for the Digital Age

Winning the War for Finance Talent

The New Rules of Engagement


The New Rules of Change ManagementContinuous Transformation is a Best Practice

• According to new research by Innosight*, we’re entering a stretch of accelerating change in which lifespans of big companies are getting shorter than ever.

• The 33-year average tenure of companies on the S&P 500 in 1965 narrowed to 20 years in 1990 and is forecast to shrink to 14 years by 2026.

• Record M&A activity and the growth of startups with multi-billion dollar valuations are leading indicators that a period of relative stability is ending and that an increasing number of corporate leaders will lose control of their firm’s future.

*Innosight executive briefing | Corporate Longevity: Turbulence Ahead for Large Organizations, March 2016

Copyright © 2016, Oracle and/or its affiliates. All rights reserved.

Turbulence Ahead: The Need to Transform

*Innosight executive briefing | Corporate Longevity: Turbulence Ahead for Large Organizations, March 2016


Disruption from the Inside Out: How Oracle Is Transforming for the Cloud


Oracle Corporation

SCALE

• Founded in 1977

• 2nd largest software company in the world

• $38.2 USD in FY2015 revenue**

• 122,000 employees

• #1 in 50 product / industry categories

• $60B+ USD on >100 acquisitions

INNOVATION

• $38.9 USD invested in R&D since 2004

• 34,000 developers and engineers

• 15 million Oracle community developers

• 400,000 customers in 145 countries

ANNUAL R&D INVESTMENT**

$1.3

$1.5

$1.9

$2.1

$2.6

$2.6

$3.1

$4.3

$4.2

$4.5

$5.3

$5.5

FY’ 13

FY’ 12

FY’ 11

FY’ 10

FY’ 09

FY’ 08

FY’ 07

FY’ 06

FY’ 05

FY’ 04

**Non-GAAP basis

FY’ 14

FY’ 15


Oracle Transformation 1.0

1998 Today

• Autonomous Countries • Multi National Corporation

• Geographic Functions • Global Functions

• Country Infrastructure • Simplified Global Infrastructure

• 100s of Instances • Global Single Instance (ERP)

• Abundance of Applications • Cloud, Social, Mobile

• Inconsistent Processes • Global Processes

• Local Support • Global Business Services

• Local Decision Making • Right-time Decision Making

• Fragmented Data • Information Everywhere


Oracle’s Business Transformation Journey

Transform Oracle to show customers how standardizing on out-of-the-box software can help transform their businesses

Scale Oracle to provide customers with a complete, integrated portfolio of hardware and software solutions to simplify IT and drive innovation

Digitize Oracle to help more customers successfully leverage Cloud and Big Data

PHASE I PHASE II PHASE III

1998 2003 2004 2012 2013 Today

Transform the Business Scale the Business Digitize the Business

OB

JEC

TIV

ES


Item Phase I Phase II

Information Technology Consolidation US $200M US $300M+

Selling Process Efficiencies $550M $1,600M+

Procurement & Supply Chain Efficiencies $150M $300M+

Internal Operational Efficiencies $100M $300M+

Total Global Savings $1.0B $2.5B+

Transformation at OraclePhase I and Phase II

Operational Efficiencies Our Strategy

Simplify

Standardize

Automate

One Best Process

Avoid Customization

CentralizeMove to Shared Services or Centers of Excellence

Make Everything Self-Service


Transformation Starts with Simplify

• Secure an executive mandate for change, starting with the CEO

• Simplify and standardize your environment as much as possible before embarking on a major transformation

• Build an expertise in creating a culture of change management

One of the things I always advise CFOs taking on large change management initiatives is that complexity is the killer of innovation and the more complexity you have in process, in systems, in organizations, in workflow, in how you make decisions, the more time and effort and money you'll spend on maintaining that complexity. That is why simplification is such a critical first step.”

Loren Mahon, VP, Global Finance Systems, Oracle; Member, FEI Committee on Finance and Technology

Modern Finance Best Practices


Standardize: Create One Best Business Process

Evaluate Business Service Center Process

• Use of technology

• Responsibility profiles and organizational structure

• Efficiency, effectiveness, relevance, best practices

• Global headcount requirements

Act as Champion of Global Process

and Articulate:

• Strategic direction

• Understanding of global requirements

• Business needs and service level standards

• Key performance indicators and their attainment

Partner With the Global Process Owner

• Global process definition

• Best use of technology

Support Elimination of Complexity and

Global Business Services Strategy

• Application support and implementation services

Global Process Owner ... In Business

Global Solution Owner ... In IT

Marry Global Process Ownership with Solution Ownership


Centralize in Global Business Service CentersDefine Activity and Do It From Fewer Places at Lowest Cost

San Antonio, US • N. America Deal

Management

San Jose, CR• Americas Deal Management• LAD Credit & Collections

Bucharest, RO• EMEA Deal Management• EMEA Credit & Collections• EMEA Rev Rec• EMEA Procurement• EMEA Expense Reporting• EMEA Comp Admin

Prague, CZ• EMEA Engineered Systems

Deal Management• EMEA Rev Rec

Bangalore, IN• Global Finance Customer Data• Global Quoting & Deal Management• Global Migrations & License Managed Services• Global Order Management • Global Project Accounting• Global Accts Receivables & Cash Applications • JAPAC Controllers• JAPAC and LAD Comp Admin• Global and JAPAC Credit & Collections• Global Exp Reporting• Global Purchasing & Fixed Assets • Global Business Finance – FP&A and Center of Excellence • SOX

Beijing, CN• JAPAC Deal Management• JAPAC Credit & Collections

Dublin, IE• Global and EMEA Controllers• EMEA Rev Rec

Bozeman, US• Global Cloud Deal Management

Rocklin, US• Americas Controllers

• Global & Americas Rev Rec

• Global & Americas Procurement

• Global & N. America Comp Admin

• Global Expense Reporting

Global


Standardized, Automated Reporting Supports Finance Partnering

Reporting Center of Excellence

India SSCBangalore

197 Countries

Location

• Oracle Global Financial Information

Center in Bangalore supports 197

countries

Strategy• Decommission Excel-based reports and

replace with predefined multi

dimensional dashboards

• Centrally produce ad hoc reports for

“Single source of truth” & efficiency

Results

• Target when established FY15:

90% reduction in manual reports

• By FY17 50% will be automated


Automate for Flexibility and Growth

The most common mistake is not building the necessary infrastructure. Many organizations learn about their infrastructure needs as they march along the maturity curve, implementing point solutions as they go. The result is limited integration with their ERP.”

The New Case for Shared Services , EY 2014

• Adopt a modern, technology-enabled set of processes delivered on global standard automation tools, leveraging the cloud strategically

• Speed “right-time” decision-making and performance measures using standardized processes and a strong data governance model

• Enable self-service everywhere

Modern Finance Best Practices


Building a Finance Bench To Influence Outcomes

Identify skills required Acquire and develop talent

Build flexibility into organization and culture

Talent review and career planning


Finance Transformation Today at Oracle

LEAP: Leadership, Excellence, Automation, Business Partnering

Leadership – Creating a culture of

continuous improvement

Excellence – Driving for efficiency without

compromising on quality

Automation – Harnessing the power of

Oracle technology

Partnership with the Business – Ensuring that

Finance is at the heart of the enterprise


Finance Modernization: Keys to Oracle’s Success

Centralize:

Build Global Shared Services

Simplify:

ReduceComplexity

Automate:

Eliminate Manual Activities

Standardize:

One BestProcess

Oracle Cloud Services


1980s 1990s 2000s 2010s

Innovation:Services vs. Products

Buyers:LOBs vs. IT

Purchasing:Subscriptions vs.

Transactions

Relationships:Lifetime vs.Break/Fix

Data Centers:Ours vs. Yours

Systems:Cloud vs. On Premise

NOW

what’s

AFFECTING


Oracle?


Our Cloud Transformation Strategy

• Develop the leading and most complete set of cloud services

• Become the best company to do business with in the Cloud



Focused on customer centricity

Today’s Business Transformation

• Create a culture of customer centricity as we scale to reach a billion customers worldwide

• Grow and nurture the sales force to focus on customer centricity and customer success

• Deploy socially-enabled, modern CX, HCM, and ERP systems internally to boost productivity and performance

• Invest in organic and acquired innovation to become #1 in cloud services, enterprise software, and engineered systems

PHASE III

2013 Today

Reach a Billion Customers

OB

JEC

TIV

ES


Cloud Transformation: Revamp the Oracle Experience

Accelerated Buying Experience

ConnectedCustomerExperience

Engaged Employee Experience


Superior Ownership Experience

Become the Best Company to do Business with in the Cloud

Built Using Oracle Cloud

Services


Keys to Oracle’s Transformation to the Cloud

• Develop the Innovation. Start with creating what customers want

• Lead from the Top. Communicate the imperative to transform

• Embrace Disruption. Provide incentives to accelerate the changes

• Reinvent Systems & Processes. To match the new business model

• Execute the Plan. Stick with it through any volatility



How the Cloud Has Helped Our Business

Improved User Experience Social and Mobile Improved Data Security Streamlined Consolidation Process Efficiency

• Role centric UI

• Job specific workbenches

• Oracle Social network to drive collaboration

• iPhone based expense submission

• User access only to data needed

• Reduced the number of steps needed

• Reduced close cycle by 1 day

• Simplified HCM processes for job, assignments & comp

• New functionality


Results of Finance Modernization & Cloud Deployment

Lower Costs

Faster Information

Better Customer Service

Strong Internal Controls and Security

Quick Integration of New Acquisitions

Empowered Employees


Executive Strategies

• Secure executive mandate to implement transformation

• Simplify your operations as much as possible before embarking

• Develop optimized global business processes and then deploy using modern systems that follow vendor best practices

• Implement a global business services model that is multi-functional and aligned with corporate strategy

• Transform your customer experience with real-time performance-based metrics

• Empower your workforce with collaborative tools and modern, socially-enabled self-service applications

• Move fast and stay the course

Drive results through digitization and system modernization


MOVE FAST

AND BE WILLING TO BREAK THINGS

Copyright © 2015, Oracle and/or its affiliates. All rights reserved. |

Modern Finance is evolving from governance to guidance

Copyright © 2014 Oracle and/or its affiliates. All rights reserved. |

For more information

https://www.oracle.com/modern-finance

cfos in the digital age - fei new › resources › documents › 4-19-16 lore… · co-create...

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